To develop clean energy utilization of sewage sludge, this study investigated the conversion behavior of organics and energy in supercritical sludge-ethanol system. The influence of liquefied parameters on products distribution, hydrogen supply process of ethanol for sludge liquefaction, migration of organics, and energy transformation were investigated. Results indicated that ethanol acted as both a solvent and a hydrogen donor. It providing H⋅ to promote organics dissociation for bio-oil production through radical reactions. Formation of new products in bio-oil such as C20H38O2 and C20H38O2 may be caused by H⋅ generated from -OH and -CH in ethanol. The increase in dodecanes and hexadecanes in bio-oil may be formed by recombination of smaller radicals such as HO·, H·, CH3⋅, CH3CH2⋅ from dissociation of ethanol and organics. Additionally, energy migration process indicated that higher temperatures increased carbon content in bio-oil from 40.88 to 48.92%, decreased oxygen content from 48.6 to 39.56%, and raised the calorific value of bio-oil from 29.63 to 30.11 MJ/kg. Besides, approximately 74.14% of sludge energy transferred to bio-oil, while about 71.94% of oxygen moved to bio-char, reducing the calorific value of bio-char to 0.03 MJ/kg. Notably, about 240.5kg of bio-oil can be produced from 1t of sludge, reducing net carbon emissions by 43.583kg, and presenting a sustainable alternative to fossil fuels. This study innovatively investigated the dual role of ethanol for sludge liquefaction, providing an efficient and sustainable method for energy recovery from sludge.